Details

Title: 1051H Chapter 32

Description: Gregory Mankiw Textbook Definitions. Jeffrey Milyo's Class

Total Flash Cards: 7

Created: 11/05/2008 09:35:20

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Term
national saving (S) =
 Definition
domestic investment (I) + net capital outflow (NCO) (net capital outflow aka net exports NX)
Term
at equilibrium interest rate
 Definition
the amount that people want to save exactly balances the desired quantities of domestic investment and net capital outflow
Term
in an open economy
 Definition
government budget deficits raise real interest rates, crowd out domestic investment, cause the currency to appreciate, and push the trade balance toward deficit
Term
trade policy
 Definition
a government policy that directly influences the quantity of goods and services that a country imports or exports
Term
capital flight
 Definition
a large and sudden reduction in the demand for assets located in a country
Term
trade policies do not affect the
 Definition
trade balance
Term
capital flight from Mexico increases Mexican interest rates and
 Definition
decreases the value of the Mexican peso in the market for foreign-currency exchange